The Joint Center for Housing Studies of Harvard University (JCHS) released State of the Nation’s Housing 2020 on November 19. The report presents data on the nation’s housing market, demographic trends, homeownership, rental housing, and housing challenges. The report shows affordability challenges worsening for renters, with COVID-19 further exacerbating these challenges. Housing challenges are compounded by racial disparities; households of color are far more likely to be cost-burdened and less likely to be homeowners compared to white households.
Renters experience housing cost-burdens (i.e., spending more than 30% of their income on housing costs) at a rate double that of homeowners. In 2019, 21.2% of homeowners were housing cost-burdened, compared to 46.3% of renter households. Among renters with annual incomes of less than $15,000, 83.5% were housing cost-burdened. Black and Latino renter households experienced cost burdens at a rate of 53.7% and 51.9%, respectively, compared to 41.9% of white renters.
The share of renter households declined for the sixth year in a row to 35.2% of all households in 2019. The authors expect rental demand to continue slowing in 2020 as rising unemployment among younger workers has resulted in more young adults living with their parents or doubling up. Between 2004 and 2019, the median rent for rental units increased 20%. During this period, the number of units renting for less than $600 decreased by 2.5 million. Most losses in affordable rental stock occurred in small multifamily buildings.
The report cites NLIHC’s findings that there are only 36 affordable and available units for every 100 extremely low-income renter household with incomes less than the poverty rate or 30% of the area median income (AMI). For very low-income renter households, who earn less than 50% of AMI, there are 57 affordable and available units for every 100 renter households. Using data from the 2020 Picture of Preservation report (a product of NLIHC and the Public and Affordable Housing Research Corporation), the JCHS researchers estimate that affordability restrictions on over 700,000 rental homes could expire by 2029.
Drawing on the Census Bureau’s Household Pulse Survey during the COVID-19 pandemic, the authors note that 49% of renter households have lost employment income since March, compared to 36% of homeowners. They find evidence of softening demand in the rental market, as the 7.0% vacancy rate in professionally managed properties in the third quarter of 2020 is the highest rate since 2010. While rents were down just 0.6% in those properties in the third quarter, that is the first actual decline since 2010. Given a 10% decline in construction permitting activity compared to 2019, the authors predict that multifamily construction may be headed toward a slowdown.
The homeownership rate rose to 64.6% of households at the start of 2020, increasing 1.2 percentage points since 2016. Homebuying drastically decreased at the start of the pandemic, but sales made a rebound in mid-summer. Home prices continue to increase, climbing 51% from 2000 to 2020 after adjusting for inflation. Rising prices have largely been driven by increases at the lower end of the market, where prices for homes at less than 75% of the area median price rose 7.6% in July.
The report concludes with a call for a new national housing agenda. COVID-19 has shone a light on both the extreme importance and sweeping need for affordable housing across the country. The authors advocate for a comprehensive national housing policy, increased federal funding for housing assistance, making housing assistance an entitlement, and expanding financial supports for first-time homebuyers.
The report can be found at: https://bit.ly/36REPbR